Information for workers' comp community.

Penalties and Interest for Late Payments

Frequently Asked Questions

Q: When does the claims administrator owe penalties or late fees?

A: Labor Code 4603.2 requires non-government employers to pay penalty and interest if a bill is not paid within 45 days of receipt. This applies to all services except Medical-Legal services, which are covered by Labor Code 4622.

Labor Code § 4603.2(b)(3) requires government employers to pay penalty and interest if a bill is not paid within 60 days of receipt.

Despite the fact that payment for electronic bills is due in 15 days, penalties and interest only apply after the respective 45 or 60 days, for electronic bills as well as paper bills.

Q: What is the penalty rate for late work comp payments?

A: When payment is not timely, the penalty is 15% of the reimbursement allowed by the Official Medical Fee Schedule (OMFS). The penalty applies to both government and non-government employers.

Q: What is the interest rate for late work comp payments?

A: Interest is calculated “at the same rate as judgments in civil actions” which is 10% per annum retroactive to the date of receipt of the bill. In order to calculate interest you must first receive the late payment, because interest is based on the number of days which elapsed from the receipt of the bill until receipt of the late payment.

For example, if a bill of $100 is paid 122 days late:

15% penalty = $15

10% per annum interest ((122 days/365 days) x 10%) x $100 = $3.35

Q: How can I bill for penalties and interest?

A: You can’t. Penalties and interest payments are “self-executing,” which means the claims administrator must voluntarily add these payments to the bill. The DWC has not established any other rules, nor do any billing codes for penalties or interest exist in the OMFS.

Q: And what if the claims administrator fails to pay penalties and interest?

A: If the claims administrator fails to include penalties and interest with their late payment, we recommend submitting a second review appeal. If the claims administrator still refuses to pay penalty and interest after second review, file a lien.

When filing the lien, we recommend you assert that the claims administrator “waived any objection to the amount of the bill because the defendant allegedly breached a dutyprescribed by Labor Code sections 4603.2 or 4603.3 or by the related Rules of the Administrative Director” per California Code of Regulations (CCR) 10451.2(c)(1)(d).

We also advise providers to submit an audit complaint if the claims administrator fails to include penalties and interest with their late payment. Audit complaints help the DIR and DWC take action against claims administrators who break the rules. These complaints also help the DWC conduct valuable research into claims administrator behavior and practices.

Audit complaints are anonymous; claims administrators never need know which provider submitted the complaint. However, we’ve found that sending a copy of the audit complaint to the claims administrator in question often results in immediate payment.